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Firms Play "Double Dutch" to Skip on Tax

MULTINATIONAL corporations including Google, Facebook, Apple and eBay are likely to have short-changed Australians by more than $1 billion in lost tax revenue thanks to an arrangement dubbed by Treasury as "the Double-Dutch Irish Sandwich".

Apropos the whole theme of how taxpayers act when taxes are increased, witness this scheme used by Google, Facebook and others to avoid corporate taxes.

It seems that when one pays for advertising on Google, for example, one buys it from an Irish subsidiary of the company which pays a 12.5% corporate income tax then transfers the money to a Dutch subsidiary. Being within the EU this transfer is tax free. The Dutch subsidiary then pays a tax deductible royalty to a Bermuda subsidiary.

This has predictably set politicians in France, Australia, etc. to huffing and puffing about these multinationals not pulling their weight with regard to their own national need for tax revenue. But what the companies are doing is perfectly legal, and the politicians are hamstrung by international trade treaties when it comes to slapping taxes on international financial transactions at their end.

Or, as they no doubt say at Google, three cheers for globalization!

"The urge to save humanity is almost always a false front for the urge to rule." --HL Mencken

Re: Firms Play "Double Dutch" to Skip on Tax

Apropos the whole theme of how taxpayers act when taxes are increased, witness this scheme used by Google, Facebook and others to avoid corporate taxes.

It seems that when one pays for advertising on Google, for example, one buys it from an Irish subsidiary of the company which pays a 12.5% corporate income tax then transfers the money to a Dutch subsidiary. Being within the EU this transfer is tax free. The Dutch subsidiary then pays a tax deductible royalty to a Bermuda subsidiary.

This has predictably set politicians in France, Australia, etc. to huffing and puffing about these multinationals not pulling their weight with regard to their own national need for tax revenue. But what the companies are doing is perfectly legal, and the politicians are hamstrung by international trade treaties when it comes to slapping taxes on international financial transactions at their end.

Re: Firms Play "Double Dutch" to Skip on Tax

Apropos the whole theme of how taxpayers act when taxes are increased, witness this scheme used by Google, Facebook and others to avoid corporate taxes.

It seems that when one pays for advertising on Google, for example, one buys it from an Irish subsidiary of the company which pays a 12.5% corporate income tax then transfers the money to a Dutch subsidiary. Being within the EU this transfer is tax free. The Dutch subsidiary then pays a tax deductible royalty to a Bermuda subsidiary.

This has predictably set politicians in France, Australia, etc. to huffing and puffing about these multinationals not pulling their weight with regard to their own national need for tax revenue. But what the companies are doing is perfectly legal, and the politicians are hamstrung by international trade treaties when it comes to slapping taxes on international financial transactions at their end.

Or, as they no doubt say at Google, three cheers for globalization!

Was Apple that invented the scheme back in the 1990s basically and are the one of the biggest in avoiding taxes (and are rarely mentioned... funny eh). That is why the multinational companies pay no where near the official corporate tax rate...

And even companies in the US are doing it.. they have almost all their sales in the US, but because they are officially registered in some Caribbean island and the "sales" are counteracted by goodwill costs or administrative costs so the end result is that the US government gets no tax income.. or even worse.. pays the company for losses... while the small Caribbean island gets a few bucks in taxes.... brilliant eh?

Re: Firms Play "Double Dutch" to Skip on Tax

No one is saying that Google is breaking the law. They are paying all the taxes the law requires.

I'm sure they pay a ton in road taxes what with all those Google camera cars buzzing all over creation.

The tree of liberty might need to be watered with the blood of patriots from time to time, but the thirst of politicians for the blood of taxpayers is constant and never ending. No one should ever be criticized for taking steps to stifle that thirst. Paraphrasing Judge Learned Hand, everyone is entitled to arrange his affairs so as to minimize his taxes and should come under no censure for doing so.

I'd like to see them try to put a tariff on those monies. There's nothing like a good trade war to exemplify stupid governance.

"The urge to save humanity is almost always a false front for the urge to rule." --HL Mencken